Series Of Events Leading To Jet Airways Downfall.

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Shazeb Fahmi
May 15, 2019   •  13 views

The commercial aviation industry in India is one of the most underpenetrated markets and yet we come across news headlines pointing the closure of various Airline Companies so frequently. It is fascinating to know that to carry 133 crore heads, the total number of aircraft in India is a mere 567. On the other hand, the count of total commercial aircraft in the USA is 7309 for a population of 32 crores. One of the major drawbacks, according to experts, of such low number of aircraft is the infrastructural capabilities of the Indian airports. Moving on, the fact is that one of the biggest international airports of India in Delhi, Indira Gandhi international airport, has only 3 operational runways. Whereas in the United States, we generally see 4 to 5 operational runways on most of the international airports.

Despite being one of the most underpenetrated markets of the aviation industry, why are the Airline industries suffering losses? Let us go through the entire series of implications that Jet Airways had to face until it grounded all of its aircraft.

  1. March 2018 - Jet Airways declared a loss of 1036 crores in its first quarter and deferred the salary of its certain employees.

  2. August 2018 - The announcement for the second quarter was cancelled by them.

  3. On 12th August 2018 - Directorate General of Civil Aviation directed for a financial audit of Jet Airways. The DGCA is the aviation watchdog of India. This was crucial, as the company might have reduced some of its safety check operations due to its financial losses, which is unacceptable in the aviation industry.

  4. 27th August 2018 - Jet Airways declared its loss of 1323 crore of the second quarter.

  5. 18th September 2018 - The Income Tax department conducts a survey in its Bombay and Delhi offices and they are charged with financial misoperations.

  6. December 2018 - It declared further losses.

  7. 17th April 2019 - India's oldest private carrier Jet Airways was compelled to halt its operations as it ran out of cash.

Other reasons that can be cited for its downfall are:

  1. Jet Airways being a fully operational Airline, could not compete with the discounts offered by the low-cost carriers such as SpiceJet. With more number of employees attached with a full-service carrier, Jet Airways could not handle the competition by offering low prices.

  2. Some of the other reasons that can be cited are, the mismanagement within the company as cited by experts. We also have come to know that, Mr Naresh Goyal, CEO, Jet Airways was would not consult the industry experts in decision making policies.

  3. The other reason is that the crude oil prices in India fluctuated more than ever. However, this is applicable to all the Airlines, but they had enough backing to manage this situation but Jet Airways was already in too much debts.

In a nutshell, the recent shutdown of the Jet Airways is a major blow, not only to the company but also to the customers. Financially, when a competitor is reduced in any particular market, due to the monopoly of the other company, there is no competition, as a direct consequence of which the customers are forced to accept the services they offer.

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